Crypto millionaire suffers $43 million loss in Ether-Bitcoin trading wager

Crypto investor James Fickel has faced substantial losses exceeding $43 million since January 10 due to his mounting debt on the decentralized lending platform Aave, which has surged to $132 million.

Fickel, an early backer of Ethereum and the founder of Amaranth Foundation, experienced a loss of over $43.7 million by essentially speculating on Ether’s value against Bitcoin. Initially, based on his 2024 investments, Fickel anticipated that the price of Ether would outperform Bitcoin. Consequently, he borrowed $172 million worth of Wrapped Bitcoin on January 10, as reported by Lookonchain on September 14.

During the period from January 10 to July 1, Fickel borrowed 3,061 WBTC (equivalent to $172 million) from Aave and traded it for 56,445 ETH at a rate of 0.05424. Subsequently, starting from August 7, he used $12 million in USDC to purchase 211 WBTC and exchanged 16,000 ETH for 671 WBTC (valued at $39.9 million) at $0.042 to repay his debt on Aave.

Since the beginning of 2024, Ether has shown weaker performance compared to Bitcoin. According to data from Binance, Ether’s price relative to Bitcoin has dropped by more than 24% year-to-date and over 9% in the past month.

Fickel’s debt on Aave has escalated to over $132 million in WBTC as of September 14, according to Debank data. His increasing indebtedness is a result of his initial belief that Ether would surpass Bitcoin in performance. By borrowing Bitcoin to invest in Ether, he essentially took a short position on Bitcoin. However, as Ether’s value declined relative to Bitcoin, this strategy led to his significant financial losses.

Fickel is renowned for investing $400,000 in Ether when its value was just $0.80. Meanwhile, Ether exchange-traded funds (ETFs) are experiencing continuous outflows, with Grayscale’s ETHE witnessing over $2.7 billion in outflows. The persistent outflows from US Ether ETFs are contributing to the subdued price movement of Ether.

Since their launch for trading on July 23, ETH ETFs have recorded cumulative negative net outflows of $581 million. Grayscale’s ETF alone has seen over $2.7 billion in net outflows, according to data from Farside Investors.

Investors had high expectations for a significant price surge following the introduction of Ether ETFs. In contrast, for Bitcoin, ETFs represented around 75% of new investments in the cryptocurrency by February 15, as it crossed the $50,000 threshold.